There are two main ways to pay back your mortgage, repayment or interest-only.  An interest-only mortgage allows you to pay just the interest on the loan each month, rather than repaying any of the capital. At the end of the mortgage term, you’ll still owe the original amount borrowed, which will need to be repaid in full.

This type of mortgage is often chosen by:

• buy-to-let investors
• high-net-worth individuals
• homeowners expecting a lump sum (e.g. from downsizing, inheritance, or investments).

The lending criteria for an interest-only mortgage can be strict, and it is not suitable if you are a first-time buyer. Lenders will typically let you borrow up to 75% of the property value, with a repayment strategy in place.  With this in mind, interest-only mortgages can be suitable for high-net worth individuals, or existing homeowners with a lot of equity looking to remortgage. Interest-only mortgages are usually suitable for buy-to-let purposes, as the landlord will be earning rental income and the property is treated as an investment. It can allow landlords to maximise the money they will receive each month, and allow them to reduce the mortgage capital when it suits them.

At Watts, we have a team of expert advisers who can access the whole of market to find the right mortgage lender to suit your circumstances. We have the experience to identify the lenders that will be happiest to consider your application, with well-established relationships to help ease the process. If you are hoping to take out an interest-only mortgage, it’s crucial that you know how you will repay the capital at the end of the term. If you begin to worry about this, it’s important to take action as soon as possible. Our team is here to listen to your concerns and help you understand your options.

• Truly independent: Whole-of-market mortgage advice tailored entirely to your needs.
• Wider choice: Access to exclusive rates beyond banks and building societies.
• Trusted transparency: Clear fees and honest, jargon-free recommendations.
• Great location: Nationwide reach with local expertise from our Nantwich base.
• End-to-end support: Stress-free help with your application, from start to finish.
• Proven pedigree: Multi-award-winning, family-run business with 35+ years of experience.

1. Have a clear repayment strategy
   Lenders will want to see how you intend to repay the loan at the end of the term. Be realistic and have documentation to support your plan.
2. Consider hybrid options
   Some mortgages allow part repayment and part interest-only. This can reduce risk while keeping your monthly payments lower.
3. Use a whole of market broker
   Independent brokers like Watts Mortgage and Wealth Management Ltd have access to the widest range of lenders and rates, not just a limited panel.
4. Plan for future rate increases
   Interest-only means lower monthly payments, but if rates rise, so will your costs. Budget accordingly and consider fixed-rate options.
5. Review regularly
   Life changes, and so should your mortgage strategy. Schedule annual reviews to ensure your mortgage still meets your financial goals.